San Jose buyers also make the largest median down payments in the U.S., report says

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As housing prices keep rising in Silicon Valley, San Jose has the nation’s highest share of home buyers with co-borrowers on their loans. Qualifying for a mortgage isn’t easy in Santa Clara County, where the median price of a single-family home is about $1.1 million. This house in Los Altos recently listed for $2.8 million. (Courtesy of Anthony Halawa and DeLeon Realty)

In what city do more than half of all homebuyers get financial assistance from family and friends to qualify for a mortgage? San Jose, where 50.9 percent of all buyers listed co-borrowers on their loan documents.

Among American cities, that’s the highest share of co-borrowers, according to a new report that examined home purchases earlier this year in dozens of the nation’s largest cities. In other words, mom and dad — or a rich aunt and uncle — are helping the kids buy houses in Silicon Valley.

As Bay Area housing continues to escalate in price, San Jose buyers also make the largest median down payments in the U.S., according to the second-quarter report from Attom Data Solutions, which compiles nationwide property data.

The report shows that for the first time, more than half of all home-purchase deals in San Jose involve co-borrowers. No other city has topped the majority. San Jose was followed by 45.2 percent in Miami; 39.1 percent in Seattle; 31.1 percent in Los Angeles; 29.4 percent in San Diego; and 28.8 percent in Portland.

“Climbing home prices are forcing more and more borrowers to consider other options, such as leveraging a parent’s credit, in order to qualify to buy,” Matthew Gardner, chief economist at Windermere Real Estate, said in the report.

Daren Blomquist, senior vice president at Attom Data Solutions, noted that co-borrowing is particularly on the increase “in high-priced markets where sizable down payments are necessary to compete.”

The report is one more indication that Silicon Valley is no longer hospitable to many middle-class earners. In July, the Demographia International Housing Affordability Survey, an annual ranking of more than 400 cities around the world, called San Jose the least affordable city in the U.S. and the fifth least affordable in the world, after Hong Kong, Sydney, Australia, Vancouver, Canada, and Auckland, New Zealand.

The Attom Data report ranks 42 cities with at least 1,500 single family home purchase loans in the second quarter. Attom Data has analyzed loan data for information on co-borrowers only three other times — in the second quarters of 2015 and 2016 and in the first quarter of 2017. Each time, San Jose topped the list, though this is the first time its share of loans with co-borrowers topped 50 percent.

San Francisco had only 500 single-family home purchase loans in the second quarter; of that smaller sample, Blomquist said, 47.2 percent included co-borrowers, more than twice the national average of 22.8 percent and just slightly below the top-ranked market of San Jose. Likewise, Oakland had only 667 single-family home purchase loans; 40.8 percent included co-borrowers.

Nationally, the median down payment for single-family homes and condominiums purchased with financing in the second quarter was $18,850, or 7.3 percent of the median price of the home — up from 5.9 percent in the second quarter of 2016.

Now look at the numbers for San Jose, where buyers put down 25.2 percent of the median price of a home. Again, that was the highest median down payment in the U.S., followed by San Francisco (22.3 percent), Los Angeles (19.3 percent); Naples, Florida (18.5 percent); and the Oxnard-Thousand-Oaks-Ventura metro in southern California (17.4 percent).

Blomquist said the “rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints.”

That certainly applies to Silicon Valley, where active listings are hovering at historic lows. Yet in July, sales actually increased 13 percent year-over-year in Santa Clara County, according to the CoreLogic real estate information service, while the median price of a single family home rose 11 percent year-over-year to $1,097,000.

In case you were wondering, Memphis, Tenn., had the lowest share of co-borrowers in the second quarter, just 10.3 percent, according to the report from Attom Data Solutions.

Richard Scheinin covers residential real estate for the Bay Area News Group. He has written for GQ and Rolling Stone and is the author of Field of Screams: The Dark Underside of America’s National Pastime (W.W. Norton), a history of baseball. During his 25-plus years based at The Mercury News, his work has been submitted for Pulitzer Prizes for reporting on religion, classical music and jazz. He shared in the Pulitzer Prize awarded to the Mercury News staff for coverage of the Loma Prieta earthquake. He has profiled hundreds of public figures, from Ike Turner to Tony La Russa.